In the third quarter of 2008, there were 4,001 compulsory liquidations and creditor's voluntary liquidations (CVLs) in total in England and Wales, the highest level recorded in one quarter for five years.
David Thomson, CEO of Close Invoice Finance, which specialises in providing funding solutions to SME businesses nationwide said, "The financial crisis has worked its way through the system and is hitting small businesses hard. The SME sector is an easy target for larger companies who are drawing out payment terms to improve their own cash flow."
"The knock on effect of an invoice not being paid can severely impact cash flow, which for the smaller business, even those with strong fundamentals, can lead to business failure. Any SME looking to minimise the impact of this growing threat, should be focussing attention on careful management of their sales ledger and debt collection processes. Also, now more than ever, they must consider the protection they can take out against the eventuality of bad debt."
In response to market conditions and the pressures on cash flow management facing their SME client, Close Invoice Finance has upgraded its award-winning online invoice discounting product, IDeal, to include a bad debt protection option. IDeal, which has won countless awards for technological innovation, already has a strong resonance with SME managers combating the effects of the credit crunch, because its unique, real-time invoice discounting operation generates up to 15% higher cash availability than traditional providers.
